Summary

Simeon McMillan’s core frame: Roku is “a little bit like the Strait of Hormuz for streaming in the United States” — it controls roughly 44% of big-screen streaming TV viewing, about three times the next competitor (which he believes is Amazon). Fox’s $22B purchase buys “the front door of streaming” and ~100M connected TVs, all in North America, and McMillan calls it a transformational acquisition despite Fox stock falling from ~$61 to under $45 since announcement.
The valuation looks worse on paper than under the hood. McMillan tentatively recalls the headline as roughly 22x EV/EBITDA, but using management’s ~$1B of 2028 free cash flow it’s about 22x EV/FCF, dropping to 16-17x with “light synergies” — and host Andrew Walker says that “actually seems cheap to me” for a growing platform, even while pressing the winner’s-curse case on a well-shopped deal with only $400M of cost synergies.
The monetization upside comes from founder-led self-help. Anthony Wood long resisted redesigning the homepage and, per an Information deep-dive McMillan cites, refused ad money from any advertiser outside the media sector — “that’s crazy… turning away money” — so the recently relaunched homepage, with Fox, Comcast and Netflix as early partners, leaves obvious low-hanging fruit for a buyer.
Walker’s sharpest pushback: this sounds like a bull case on Roku, not on Fox-plus-Roku — “anyone could have gotten this,” and a Switzerland Roku auctioning its front page to the highest bidder might beat Fox self-preferencing, the way Google doesn’t need to own GEICO. McMillan’s rebuttal: Fox avoids the cash bonfire of running its own streamer, gains negotiating leverage after YouTube TV “punched Disney right in the mouth,” and uses old Viacom as a warning about the risk of being permanently impaired as a pure-play — “Fox no longer is tied to the cable bundle.”
Tubi is “the Fox piece that I’m the most bullish on.” ~100M monthly active accounts, 2-3% of big-screen viewing (almost equal with Prime Video), and about one-third audience overlap with Roku when deduplicated — combining Tubi’s free on-demand with the Roku Channel’s linear-style streaming triples advertiser reach, and a future Fox Super Bowl “could be on Roku. And Tubi. And linear.”
Why sell now: McMillan says streaming viewing and ad budgets were reaching a majority share, while the buyer pool was objectively shrinking — Walmart took itself out with Vizio, Amazon was no longer available, and Paramount might have been a buyer a year earlier. Walker floats an AI-slop tail risk to Roku’s time share; McMillan flips it — AI content fragments media further, which “is only going to make who controls the pipes even more important.”
The Spotify “gotcha” reveals McMillan’s Pokémon theory of media investing: “your media type… matters what you can then evolve into.” He’s underperform on Spotify despite the platform parallels because audio CPMs will always be lower and slower-growing, music is undifferentiated across services, and YouTube Music can raid Spotify’s bucket more easily than Spotify can raid video’s.
Walker says McMillan has strong buys on Google and Meta; McMillan calls them “true value stocks” that are “perennially doubted” while ad impressions spike and pricing holds. McMillan expects re-rating once CapEx dials down — “the catch-up can be fast and abrupt” — and flags Meta’s enterprise tools as the most under-appreciated asset; Walker notes core Meta trades at maybe 11x after-tax operating profit growing 20% if Reality Labs is added back.

Deep dive

1. The deal frame: Fox just bought the Strait of Hormuz of streaming

McMillan’s central metaphor, which he wishes he’d led with in his first piece: as the Strait of Hormuz carries ~20% of world oil, “Roku controls about 44% of streaming television viewing through big-screen television sets” — roughly three times the next competitor, which he believes is Amazon. His plea: “step away from the spreadsheet and let’s just bask in what we have here.”
His long-standing view is that Fox has “the smartest corporate management team when it comes to doing large-scale M&A” — they “won the streaming race basically by not really playing,” selling nearly all entertainment assets to Disney in 2019 while keeping the vital core: 29 owned-and-operated local stations covering effectively all top-15 markets, Fox News (which he calls both a news and entertainment channel and “the most profitable cable channel in the history of existence”), and Fox Sports.
Seven years later, Fox is “basically buying distribution”: ~100M connected TVs, all North American — “we’re not diluting it with a whole bunch of cheap subs or eyeballs outside the US” — and a hand in shaping where the industry goes. A deal was not going to happen until founder and controlling shareholder Anthony Wood got involved.

2. The homepage unlock — and the founder who had to be dragged to it

Walker’s connection: everyone always said the most valuable real estate in media was the Netflix homepage, and Roku just relaunched its own about a month before the sale leak — with Fox, Comcast, and Netflix as instant partners. His read: Roku went to bidders saying “this is your one opportunity to get the Netflix homepage that you’ve always wanted,” and he likens Wood’s resistance to redesigning it to Bezos-era stubbornness.
McMillan, citing a July 2025 Information deep-dive on “the education of Anthony Wood”: the CEO had to be forced into basic ad-sales blocking and tackling, including a rule that “you cannot take ad money from any advertiser who is not in the media sector” to keep the platform “clean and visually pure.” His verdict: “that’s crazy. That is absolutely crazy, turning away money” — the biggest local-TV advertisers are typically auto dealerships.
The valuation consequence: McMillan tentatively recalled that on paper the deal was around 22x EV/EBITDA, though he said he did not have the precise numbers in front of him. Against management’s ~$1B of 2028 free cash flow it’s ~22x EV/FCF, and light synergies take it to 16-17x, “a whole lot cheaper.”

3. Walker’s winner’s-curse case vs. McMillan’s pure-play warning

The market’s verdict is brutal: Fox from ~$61 to under $45 in two weeks in a flat-to-rising market, a well-shopped deal, a big premium, and only $400M of cost synergies. Walker’s framing: everything Roku offers “was available to everyone” — classic winner’s curse, in a sector where “media M&A, it’s like steroids, all the value going to the seller.”
McMillan grants the voting-machine reaction is “rational, although misguided” — investors are over-anchoring on trailing financials distorted by platform build-out spend that won’t recur. His history lesson: he says he picked on David Einhorn while many famous investors praised old Viacom as a disciplined pure-play returning money through buybacks — until the risk was permanent earnings impairment, followed by desperate Hail Mary deals such as what CBS got with Paramount.
The uncomfortable mirror for Fox holders: bearish analysts had already flagged that Fox is the smallest of the big four networks “without a big brother” to fund the sports-rights arms race. “Fox is on an island. Fox was always going to have to bulk up… the future of going alone was much more dangerous for Fox than it was for Roku.” He also likes the structure: ~60% cash, Fox holding ~70% of the combined company.
The rebundling clock is ticking: Nexstar’s CW made Roku the streaming home for its shows and sent its sports to ESPN Plus. “You’re going to wake up in 2027, and certainly 2028, where everyone else is going to be partnered up” — and via this deal, “Fox no longer is tied to the cable bundle.”

4. “You’re bullish Roku — I’m not hearing why Fox-plus-Roku is better”

Walker’s best pushback of the episode: the revenue-synergy case is unproven — is Fox self-preferencing its front page really better than “Roku is Switzerland and the highest bidder can always come,” bidders tearing each other up like Google search keywords? “Google doesn’t need to own Geico.” His suspicion: McMillan is really bullish Roku at the price, and the Fox strategic fit is riding along.
McMillan’s answer runs through cord-cutting, which he thinks “investors are still underestimating.” Every rival is torching cash to run a streamer — Comcast propping up Peacock, Paramount Skydance funding Paramount Plus, and Warner Bros. having to spend doubly while running HBO Max separately — a cost Fox never has to bear “because they have Roku as their output.”
The leverage point he thinks is under-appreciated: YouTube TV is now the number-one pay-TV distributor, and last year it “punched Disney right in the mouth” in a carriage dispute, saying “we don’t care if we miss NFL games” — then won, forcing Disney to hand its premium streaming sports to all YouTube TV subscribers. “YouTube’s never going to be able to pull this with Fox, cuz YouTube’s going to say, ‘Okay, we’ll go around you.’” Fox’s BATNA in every future distribution deal just improved.

5. Tubi is the sleeper — and the piece Walker doubts most

McMillan’s tease: “the Fox piece that I’m the most bullish on doesn’t even have Fox’s name on it, and that’s called Tubi.” ~100M monthly active accounts, roughly 2-3% of big-screen viewing — “almost equal with Prime Video” — and it’s become the quiet destination for library content studios pulled from their own services, like the old shows Warner Bros. took off HBO Max.
The mechanics: about one-third audience overlap deduped between Tubi and Roku; management says they won’t combine the services and he believes them — “but they will be selling them together. I have no doubt.” Tubi’s free on-demand plus the Roku Channel’s linear-style streaming triples advertiser reach; combined online viewing across Roku Channel, Tubi, and other Fox properties is roughly equal to Disney. Fox put the Super Bowl on Tubi two years ago; next time, “you could have a Super Bowl on Roku. And Tubi. And linear.”
Walker’s bear case, left standing: any FAST channel can already pay Roku for placement, and Tubi’s growth may be “kind of non-economic” — subsidized by heavy Fox content investment, including Disney content, that generated losses elsewhere.

6. Why sell now: the inflection point met a shrinking buyer pool

McMillan’s answer to “why now”: he thinks TV viewing and ad budgets began shifting from under 50% streaming to a majority share in the last year or two — cord-cutting talk is a decade old, but “the last quarter or two is the first time where streaming viewing on big screen actually went higher than linear.”
Both agree the buyer list was collapsing: Walker says Paramount is off the table, Walmart removed itself by buying Vizio, and Amazon is out. Walker’s counter from media history — “there is always one” buyer, from Japanese conglomerates to Sumner Redstone — and McMillan notes how “lucky Warner Bros. got” finding a Paramount “willing to spend effectively anything.”
Walker floats a tail risk: AI video (YouTube’s CEO’s Minecraft-slop analogy) could siphon human attention away from Roku’s screen. McMillan inverts it: AI content fragments the pie further, and since newer creators, many overseas, get near-instant distribution via YouTube, “more fragmentation is only going to make who controls the pipes even more important” — especially as the fight shifts from dongles to operating systems against Samsung, LG and Fire TV, where Walmart-Vizio is chasing the “holy grail” of pairing viewing with first-party sales data. That same pairing is a major reason Amazon Prime Video gets ad dollars “without having any big hits.”

7. The Spotify gotcha and the Pokémon theory of media

Walker’s fun trap: swap “Spotify” for “Roku” and much of the distribution-plus-AI bull case holds “on steroids” — yet McMillan has an underperform on Spotify. “It’s hard for me to marry your huge bullishness on the Roku platform with the bearishness on the Spotify platform.”
McMillan threads it via his most-read piece, the Pokémon theory of media investing: “your media type… matters what you can then evolve into.” Audio-first means a permanent ARPU ceiling — audio CPMs are lower and grow more slowly, and music is identical across services, so a new Taylor Swift song “is going to be everywhere.” He’s even “a little bit bearish on AI music,” and notes the labels aren’t as antagonistic as assumed — they give Spotify cheaper royalty rates as subscribers grow. Net: YouTube Music can take from Spotify’s bucket more easily than Spotify can take from video’s. “Audio is always going to be the little brother.”

8. Google and Meta: perennially doubted value stocks awaiting a re-rating

McMillan’s framing, delivered with an elder-millennial grin: Google and Meta are finally “true value stocks” — earnings strong and growing, “perennially doubted,” multiples contracting. Skepticism will persist “as long as the big spending is out there,” but ad impressions are spiking as AI improves delivery and pricing holds; once CapEx dials down, “the catch-up can be fast and abrupt.”
He coins a “complexity discount” — investors fixate on one part of a conglomerate — and calls Meta’s enterprise tools the most under-appreciated piece: newly announced subscriptions for Instagram and WhatsApp give “line of sight to billions of dollars of additional revenue” from Meta’s real identity as a small-business ad platform. On the doubters: “I don’t have a lot to dispel the doubters. I just know that they’re cheap. They’re getting cheaper.”
Walker’s riff on the paradox: everything AI is spiking except the Magnificent 7’s AI efforts — Microsoft and Meta are down year-to-date, Amazon is flat, Google’s shine is coming off, while Micron and Nvidia moon — and by his math core Meta trades at maybe 11x after-tax operating profit growing 20%, with the “fourth best lab” behind Anthropic, OpenAI and Google thrown in. His open case study: would Meta be better with AI spun out to justify its own spending, versus Zuck’s voting-control long-term vision — especially if discounted equity is about to be raised?

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